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Mass. AG Seeks Hearing on Purchase of Receivables Terms and Conditions
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October 18, 2010
The Massachusetts Attorney General asked the Massachusetts DPU
to require competitive suppliers and the electric distribution companies to submit
witness testimony and exhibits, with discovery and cross examination on such evidence,
to support their respective positions regarding Purchase of Receivables (Docket 10-
The Attorney General said that evidentiary hearings are needed since the Attorney General was not part of negotiations between the distribution companies and suppliers to develop model terms and conditions for POR, which reached consensus on most items. Left in dispute is the appropriate mechanism for reconciliation, as well as whether a specific implementation timeline should be set (9/21/10).
"The failure of the Companies and Suppliers to provide sufficient evidence [to support the model terms and conditions] is apparent in several respects," the Attorney General said.
The distribution companies are seeking to reconcile the revenues recovered under the POR uncollectible rate against actual uncollectibles experienced by competitive supply customers. Competitive suppliers favor reconciling uncollectibles against the uncollectibles experience of all distribution customers.
The Attorney General noted that, in support of their position on the Past Period Reconciliation Percentage (PPRP), the distribution companies assert that should the Department adopt their proposed reconciliation, the mechanism would, "minimize any incentive by the Competitive Suppliers to 'game' the system."
"The Companies provide no explanation or evidence with respect to how the Suppliers may 'game the system,’ leaving unanswered the obvious questions of what asserted illicit activity the Suppliers would be incented to engage in should the Department adopt the PPRP proposed by the Suppliers, and whether such asserted incentive is harmful to ratepayers," the Attorney General said.
"As the ratepayer advocate and chief law enforcement official of the Commonwealth, the Attorney General takes the EDCs suggestion of 'gaming' seriously, and invites further explanation from the EDCs with respect to the asserted 'gaming' incentives," the Attorney General added.
In reply comments, the distribution companies said that to the extent competitive suppliers serve customers that are reflective of the overall mix of customers in the relevant class, the two methods or reconciliation would yield the same result. "Therefore, if RESA and Dominion are correct, they should have no objection to the Companies' proposal, since it will have little or no practical consequences," the distribution companies said.
Furthermore, the distribution companies argued that reconciliation against only competitive supplier actual uncollectibles, "fits in with our current regulatory framework."
"Basic Service bad debt, not all bad debt, is collected on a reconciliation basis from Basic Service customers. It would follow that competitive supplier bad debt should be collected on a reconciliation basis from competitive supplier customers. To the extent that the competitive supplier bad debt on aggregate is different on a percentage basis from the Basic Service bad debt, the Company will have to record either a gain or loss on this amount. This introduces risk to the Company that is not currently present," the distribution companies said.
The Attorney General further requested that the electric distribution companies be ordered to flow any revenues received from POR in excess of costs to all of their respective distribution customers through the basic service adjustment factor credit to base rates. "Such excess revenues should not be retained by the EDCs, given that the resources used by the EDCs to provide the POR services to the Suppliers are EDC resources, paid for by their distribution customers," the Attorney General said.
Any loss from POR, however, "should be borne by the appropriate suppliers," the Attorney General said.
The distribution companies also oppose suppliers' request for a specific timeline for implementation, citing potential changes in any DPU orders regarding POR which prevent them from working on system changes until such an order. "Although it is the intent of each of the Companies to work diligently to ensure a timely implementation of the program, there is insufficient information at this time for the Department to establish schedules, milestones or work plans as requested by RESA and Dominion," the utilities said.
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